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Risks on Others

Author

Listed:
  • Takaaki Hamada

    (Faculty of Economics, Toyo University and Junior Research Fellow, Research Institute for Economics and Business Administration, Kobe University, JAPAN)

  • Tomohiro Hara

    (Department of Economics, University of Maryland at College Park, U.S.A.)

Abstract

We investigate other regarding preferences when others are involved in some risks. We call such risks "risks on others (ROO)." We design a novel experiment to capture ROO, and also theoretically define risk attitudes toward others under two dimensions: an absolute term, which characterizes one's risk attitudes toward others without comparing with other individuals, and a relative term, which compares these risk attitudes between individuals. From our experiment, we find that decision makers exhibit robust risk-averse behaviors, which contradicts the most representative linear inequality aversion models by Fehr and Schmidt (1999). Utilizing our experimental setting, which enables us to compare risk attitudes toward others between subjects, we also investigate the effect of sources of ROO on other regarding behaviors.

Suggested Citation

  • Takaaki Hamada & Tomohiro Hara, 2020. "Risks on Others," Discussion Paper Series DP2020-23, Research Institute for Economics & Business Administration, Kobe University, revised Sep 2022.
    • Handle: RePEc:kob:dpaper:dp2020-23
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2020-23.pdf
    File Function: Revised version, 2021
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    More about this item

    Keywords

    Other-regarding preferences; Risk preferences; Inequality aversion;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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